2014 Reports

Does Developmental Education Improve Labor Outcomes? Evidence from Two States.

Hodara, Michelle; Xu, Di

Nationally, about two thirds of community college students are referred to developmental education. Thus far, research on the effectiveness of developmental education has focused on students’ academic outcomes; in this paper, we examine the economic consequences of developmental education for students. Using longitudinal student-unit record data from two large community college systems linked to wage record data, we estimate the labor market returns to developmental credits versus college-level credits for two cohorts of students who attended community college in North Carolina and Virginia. While both states’ implemented new placement exams and developmental education course structures and curricula beginning in 2012, during the time period under study, both states’ developmental education programs and policies were fairly traditional and similar to those of other states nationwide. We find that, in both states, earning developmental reading and writing credits led to an increase in earnings, which is primarily attributed to an increased likelihood of employment. These findings suggest that earning developmental English credits may represent an improvement in academic literacy skills that are valuable in the labor market and improve individuals’ employability. In contrast, in both states, developmental math credits had negative impacts on earnings. That is, the opportunity costs associated with developmental math credits, particularly for those assigned to the lowest levels of the developmental math (and thus to the longest course sequences), tended to outweigh the potential labor market value these credits may bring. The negative impact of developmental math coursework on wages provides support for nationwide efforts to shorten the long-sequence structure of developmental mathematics, and to teach math skills that are applicable to students’ real-world needs.